Moon of Alabama Brecht quote
December 19, 2008

The Carmakers And The TARP Deal

November 12: Will Paulson Spend The Full $700 billion TARP?

As the first tranche of the $700 billion is nearly gone, the Treasury will tell Congress that help to Detroit through the TARP program can only be given if Congress immediately and unconditionally hands over the full second tranche.


The conditionality of an auto bailout on releasing the second half of TARP is not made explicit, but that they are announced together is very suspicious:

Citing danger to the national economy, the Bush administration approved an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans in exchange for deep concessions from the desperately troubled carmakers and their workers.
At the same time, Treasury Secretary Henry Paulson said Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions.

Only yesterday the White House said it was considering bankruptcy for the automakers. That was certain to build pressure. Only three days ago Paulson said he will not ask for the second TARP tranche at all. Now he does. Now he knows he will get away with it.

I believe there is a deal behind this. Bush pressed Reid and Pelosi to not block TARP part II as a condition for a TARP loan to the automakers.

To formally get the second half of TARP Paulson needs to send a plan to Congress on how he wants to spend it. Congress then has 15 days to block the money. Bush could veto that block. Congress could override that veto.

But what if  Reid and Pelosi do not call Congress back to Washington between Christmas and new years eve to stage a difficult fight to block the second $350 billion?

The second TARP tranche will sail through quietly. Congress will aprove it by not convening. And the automakers are safe for now.

Posted by b on December 19, 2008 at 17:27 UTC | Permalink


The greatest theft ever.

Posted by: slothrop | Dec 19 2008 17:37 utc | 1


Posted by: annie | Dec 19 2008 18:01 utc | 2

What is Franks doing here? Bloomberg: Congress Ready to Tap $350 Billion in Aid, Frank Says (Update2)

Dec. 19 (Bloomberg) -- U.S. House Financial Services Committee Chairman Barney Frank said Congress will release $350 billion from the bank-rescue package after lawmakers, President- elect Barack Obama and Treasury Secretary Henry Paulson agree to provide foreclosure relief and aid to automakers.
Frank said he’s ready to act on the legislation during the final month of the Bush administration, without waiting until Obama’s Jan. 20 inauguration.

“Why wait three weeks? Let’s do it,” Frank said. “We’re in a crisis now. How many people’s homes will be foreclosed?”

Lawmakers will have a chance to vote for a bill to reject Paulson’s request for the funds, “but I think they should also have a chance to vote for a bill that allows it go forward with these conditions,” Frank said.

I wonder if he got the timeline right ... or is this just for show?

Posted by: b | Dec 19 2008 19:02 utc | 3

Could this be (a small part of an ongoing) conspiracy?

--Your Resident Conspiracy Theorist

Posted by: rapt | Dec 19 2008 19:09 utc | 4

Conspiring to fuck the US taxpayer? I think that's a done deal. What in the world is this country going to do with that kind of debt? I have no children so I don't have too much to worry about. I can leave this country (if necessary) and find work in my trade (plastic injection molding) nearly anywhere. Young folks with new families and mortgages don't have that kind of choice. They've now got a hefty tax burden to look forward to, along with their mortgages, insurance, utilities, transportation and basic sustenance. I'm not even counting things like college education for the kids, tithes for the local shaman (for those who aren't atheist), or any of the other costs associated with living a "normal" life. A life of crime could start to look like a viable option. I think the people are too cowed to even look at other options like revolution...

Posted by: Jim T. | Dec 19 2008 21:40 utc | 5

I'm definitely not a financial wizard but with GM and Ford 2007 revenues at $181B and $172B respectively ($353B), $17.4B seems like a drop in the bucket, probably not even enough to cover executive bonuses.

Posted by: Don Bacon | Dec 19 2008 23:41 utc | 6

The USfedgovt is just waiting for an excuse to declare marshal law. I mean how can you have a proper police state if you don't have the armed troops patrolling the public streets?

Posted by: James Crow | Dec 19 2008 23:54 utc | 7

I knew I wasn't dreaming. dubya made his speech in the wee small hours (local time) and although I was half asleep I tried to listen to it it. If only to see if he was going to pull the stunt we predicted here a couple weeks back.
I heard dubya refer disparagingly several times to unions and employee benefits before he delivered the kicker which I found trepeated in the Ottawa Citizen of all places:-
The deal also imposes requirements for the companies to strike deals with the United Auto Workers to bring labour costs in line with those of foreign automakers operating in the United States.
That remark still contains the ambiguity of Bush's statement but more importantly the article makes the point about Obama's responsibility for all of this.
It also requires that repayment will be demanded on March 31st if the automakers haven't demonstrated their financial viability by then.

Who remembers the pre 87 eighties the stockmarket boom for the baby boomers when the 'finance industry' was about asset stripping and takeovers. One of the favourite pastimes was talking in a silly jargon to show that you has some sort of financial nous in a world of myriad ponzi schemes. 'white knight' was one, 'greenmail' was another and the all time favourite for ruining a takeover was the 'poison pill', well old dubya has hit Obama with the perfect poison pill here.

If the O decided, for example, to hassle a bit about where the rest of the $700 billion went he can be knocked on his ass by rethug senators demanding that he de-knacker the auto unions even further than he already has.

It's a beautifully crafted piece of work. Obama will be responsible for ensuring that the unions in Detroit get hammered and if he doesn't go far enough or tries to deflect discussion onto where the $683 billion that didn't go to the car industry and certainly didn't go to relieve home mortgages went, he will be forced to close down Detroit thereby eviscerating the what's left of the dem base in the rust belt.

And that's not considering the flow on from hundreds of billions worth of derivatives betting against a Detroit meltdown. The inevitable crash, the one that will happen no matter what anyhow, will then become the responsibility of the neophyte dem prez.
All the wanna be rethug prez candidates that ran for cover in '08 will be hawking their forks around DC from mid '09 onwards trying to jag the '12 nomination.

Meanwhile the gang rides off into the sunset $17 billion short of $700 billion.
I predict that it prolly won't be needed to be called in -the demand to bankrupt the automakers that is, the unions are about to cop in big but that was inevitable when you've got a national legislature almost entirely devoid of members who know what it is to work 40 hours and still need to pull overtime to pay the rent.

Dem legislators are going to be much too busy passing laws preventing beneficiaries of Bernie Madoff's largesse from having to hand over their ill gotten gains.
You see while many lost everything they invested with Madoff others did cop a fair wad of ackers until the crash and apparently those who got nothing have been briefing lawyers to begin suing those who got quite a bit.

From the Jewish Journal via Alex Cockburn:

“A phalanx of plaintiffs attorneys are trolling this very moment for clients who are certain to mount a legal assault on charities, universities and other non-profits in a bid to force them to disgorge past donations whose origins can be linked back to the Madoff scheme.

“At the very least, large numbers of individuals and institutions who today consider themselves to be victims of the Madoff scandal should brace for forthcoming legal actions that will allege their remaining wealth is not theirs at all – rather, it is the recoverable property of other claimants who were bilked by Madoff.

To keep their libraries, laboratories, scholarship programs, hospital services, meal programs and the like, universities and other non-profits who continue to operate in the wake of the Madoff scandal will also almost certainly have to retain law firms to combat efforts to strip those non-profits of past Madoff-related donations – whether directly from Madoff or indirectly from Madoff investors.”

[sorry typepad rules prevent a link - go google]

Now Alex Cockburn goes on to point out that many of the beneficiaries who received the most from Madoff were in Israel, zionist charities as well as the backers who financed the conservative political campaigns.


Well how much pressure is AIPAC going to put on dem legislators to quit worrying about amerikan workers and get down to the real business at hand, ensuring that Israel rules the ME?
None? dream on sucker

Some? yeah right fool - you think they gonna be worrying about voters when money, the magic stuff that can get a dwarf intellectually challenged inbred pseudo-texan into the whitehouse can be got better by not looking after voters?

A lot? Of course a lot. When has the amerikan legislature ever not taken the route demanded by lobbyists?

There's a question for the sons of waldo still stumbling round MoA like zombie lefties accusing everyone else of pessimism - just because we can read the writing on the wall.
Step one must be to stop these greed heads (many of whom weren't jewish anyhow - being latecomers to the Madoff ponzi rip) from suing the sacred state of Israel and all who sail in her.

That will have to be a particularly carefully crafted piece of legislation because of course there will be those who lost who do have the power to cause trouble if they can't sue to get some back, and some who don't have the power to get protection from lawsuit who live outside amerika but not in Israel.
This sort of sly legislating requires complex drafting of impenetrable clauses along with myriad cover stories to feed to the ever compliant media.

There will be plenty of distraction from further financial 'bombshells' - some genuine results of the collapse of the sub prime house of cards, but others will be like the automakers scam, opportunistic scripted scenarios designed to fool shit-kickers into accepting even further roll back of necessities too many have come to take for granted because it wasn't them who fought and died for the right to a minimum wage, maximum hours, healthcare and pension - it was their fathers and grandfathers.

So those who have been so callously declaring Obama a great even while he promises to slaughter millions more unwhites around the planet, on the grounds he was going to dribble a few dollars down to the shit-kickers in amerika, may want to rethink their approval for this 'change'.

Posted by: Debs is dead | Dec 20 2008 0:04 utc | 8

It should be clear to everyone by now that this dreadful series of events and emergencies is riding on rails, is going according to plan.

The plan for America, all along, has been Banana Republic.

A nation of poorly educated renters and workers, ruled by their betters -- the wealthy five percent who own everything worthwhile, control all the capital, rule over the government, dictate laws in their own favor, stack the courts with their own judges, and send out the police and nowadays the Marines and Army to enforce those laws, right down to kids with M16's dressed in camo staffing DUI checkpoints along California highways.

The plan for America is the Five Percent Solution -- move all money and power into higher, tighter, whiter, righter hands.

What the corporate state and the wealthy who own it need is economic cattle. They need renters, they need peons, they need blind believers, they need economic slaves. They are succeeding in their quest.

Peak Oil is upon us. Despite the current low prices caused by economic shock and awe, the price of oil will climb inexorably in the years ahead. Cheap energy is now an oxymoron. We will never pump more oil than we do right now, and the price of everything touched or served by oil will rise in the years ahead -- yet every economy, company, and living human being on Earth still wants to grow, every coming year, from now on, forever.

We will borrow the entire wealth of the next two generations in order to try to re-inflate any kind of asset bubble and get the great casino rolling again, if only for a few more years. It won't happen, because it cannot happen, because of the number one -- one planet Earth to work with. It isn't growing at 3% a year, so the global economy isn't going to, either. It will be a struggle among several hundred local national economies to work out which one or two or three will grow 3% at the expense of all the others.

This is the moment when the American people need to pull all together to redefine and re-prioritize as a nation, need to move from planetary policeman to an energy independent nation that sees to its own people before its global empire. Our political class is still living in 1985, in the politics of divide and conquer, of carrot and stick.

They use corporate deregulation and self-regulation to rape the environment, despoiling the very air we breathe and the water we drink and the food we eat for the further profit of a few. That air, water, and soil will belong to your grandchildren, and we allow it to be permanently poisoned for the sake of a few corporations' profits in one fiscal year. That fiscal year matters more than our grandchild's health and happiness?

And we, the people, are to pay for it all, as with the Savings and Loan scandal, as with the Vietnam War, as with the Iraq War, as with the next war, and the next.

Making off with government pensions, corporate pensions and Social Security by bankrupting corporations, local governments and the Federal government itself is the plan.

Keep moving moolah to the top five percent of the population, the five percent who already own way over half the assets and capital of this nation. Go forth to tell the public to live in fear, tell the public they are being attacked from without and within, tell them outright lies, present them with a series of emergencies that no one could have seen coming. Just keep moving that moolah to the top five percent.

The Five Percent Solution is upon us, yet we sleep, eat, and work, and think it cannot happen here. We march to the nearest electronic voting machine now and then to cast our sacred vote into the whirlwind, never to be counted or to count again.

We cannot bring ourselves to believe that they are after our freedoms and funds and future -- and after us. Not us. Not we, the people.

They're politicians, leaders, learned and dedicated people. They're not gangsters, thugs and thieves. Surely they do not mean us any real harm. Surely it cannot happen here. This isn't Argentina.

Posted by: Antifa | Dec 20 2008 0:04 utc | 9

Why bother to pillage if you only get half the loot?

Posted by: JohnH | Dec 20 2008 3:09 utc | 10

Hedge funds gain access to $200bn Fed aid

Hedge funds will be allowed to borrow from the Federal Reserve for the first time under a landmark $200bn programme intended to support consumer credit.

The Fed said on Friday it would offer low-cost three-year funding to any US company investing in securitised consumer loans under the Term Asset-backed Securities Loan Facility (TALF). This includes hedge funds, which have never been able to borrow from the US central bank before, although the Fed may not permit hedge funds to use offshore vehicles to conduct the transactions.

The asset-backed securities to be funded under the programme are pools of credit card receivables, automobile loans and student loans.

The idea is to increase the supply of these loans and reduce borrowing rates by ensuring that the companies that make the loans can sell them on to investors who have guaranteed access to low-cost funding from the Fed.

Typical supply-side nonsense...

Posted by: b | Dec 20 2008 5:39 utc | 11

This hedge fund stuff is total BS. But always remember, the Fed is quasi public, quasi private. The Fed has stock holders who make money off all transactions through interest payments. While they are allowed to make money through tr3easury sales, the ultimate goal of the Fed is to look out for the banks. If hedge funds are threatening the banks, hedge funds will get bailed out.

The Fed as it is currently structured is obsolete. The European
Central bank is much better and so are the Asian banks.

One problem with the Fed, while it is modernized and has inflated the world economy, they still act like its the 1920's.

Hedge Funds need regulation as they create to much volatility in the market. They are blood suckers pure and simple.

Posted by: jdp | Dec 20 2008 16:47 utc | 12

the feeling in the countries bellow the Rio Grande is exactly that: "uau, it turns out that the biggest Banana Republica of the continent is the US"

Posted by: rudolf | Dec 20 2008 21:18 utc | 13

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